IRAC sets out reasons for jump in gas prices

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The  Island Regulatory and Appeals Commission promised a clearer explanation of why it is changing the price at the pumps and it delivered on Sunday.

Gas nozzle. File Photo

That after the minister responsible for the commission raised the issue on the floor of the P.E.I. legislature.

“I think, from what I’m hearing from some of the coffee shops and some of the members (MLAs) that perhaps they should do a little better job explaining why they move it, why they don’t move it, why it goes up or down,” Alan McIsaac said earlier this month.

On Sunday, the commission announced a 2.0 cent per litre increase in gas prices effective 12:01 a.m. on Sunday.

Including adjustments for taxes, pump prices for regular unleaded gasoline at self-serve outlets will now range from 130.6 cpl to 131.8 cents per litre.

In its release, the commission said wholesale petroleum product prices have increased significantly since its last adjustment on Nov. 1. There was no change in prices on Nov 15. Specifically, the wholesale rack price over the past month has increased by 3.5 cents per litre for gasoline, the commission said.

“A variety of factors have contributed to this situation,” the commission notes. “While WTI prices (the crude reference for Western North American crude) have fallen, Brent crude prices (the predominant pricing determinant used by East Coast North American refineries) have actually risen over the past 60 days from $107 to $111 per barrel. Indeed, the gap between Brent and WTI pricing has grown from $6 per barrel to $19 per barrel over this same time period.”

The commission said the reduced capacity of East Coast refineries over the past two months due to seasonally scheduled maintenance and product switchover has impacted overall market supply and this, combined with noted increased demand, has served to create an upward pressure on wholesale prices.  

A continued growth in the export of diesel and furnace oil to Europe, Asia and South America, combined with the approach of colder winter weather, has similarly impacted furnace oil and diesel pricing, the commission added

“It is hoped that with the anticipated imminent return to normal capacity of refineries in the region, petroleum product inventories will be allowed to recover and wholesale pricing moderation will be observed.”

Geographic location: P.E.I., North American, East Coast Europe Asia South America

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Recent comments

  • REAL QUESTION
    December 02, 2013 - 11:17

    The real question is why three taxes on fuel FEDERAL EXCISE TAX 10.1 cents per litre, PROVINCIAL FUEL TAX 13.5 cents per litre, and HST 14% (INCLUDING 14% of the other two taxes. Shouldn't the real question be why do they need three taxes on a litre of fuel. Answer that one WES?

  • Darthmom
    December 02, 2013 - 06:23

    "A continued growth in the export of diesel and furnace oil to Europe, Asia and South America, combined with the approach of colder winter weather, has similarly impacted furnace oil and diesel pricing, the commission added" So they actually put the price up when they know we are going to need more of it. We always knew they did but to have them admit it, poor form.